Over 1000 public schools throughout California are set to receive their share of $68.5 million in a landmark California False Claims Act settlement with Office Depot. The whistleblower who reported the fraud has been awarded a hefty amount of money as well.
Office Depot Allegedly Overcharged California Schools
According to a news post from the San Bernardino County Sun, Los Angeles and San Bernardino counties are two of the big winners in the resolution of California False Claims Act case surrounding an alleged scheme whereby Office Depot fraudulently overcharged California school districts for school supplies.
More specifically, the allegation was that Office Depot had guaranteed “lowest price” treatment for its school customers by the terms of the United States Communities Government Purchasing Alliance (a co-op purchasing program for public schools) but offered larger discounts to some schools.
Office Depot Account Manager David Sherwin Filed California False Claims Act Lawsuit
The misconduct was originally reported by a company manager turned whistleblower in 2009. The whistleblower in question was a former Office Depot Account Manager David Sherwin. He utilized California’s False Claims Act to speak out against the company by filing a lawsuit on behalf of the State of California which prompted the investigation and subsequent $68.5 million settlement.
California’s False Claims Act is a state law, patterned after the U.S. FCA, that encourages executives and other employees to blow the whistle on fraud and other wrongdoing causing financial loss to the government.
The intent of the Act is to empower citizens to help the state limit fraud that inevitably costs taxpayers millions.
California Whistle Blower Statute’s Cash Reward Incentive
The incentive for becoming a whistle blower comes in the form of a percentage of the recovered amount – generally anywhere from 10 to 30 percent under the terms of California’s FCA.
In the Office Depot case, the total amount of the settlement was $68.5 million. Sherwin’s cut was $23 million.
Office Depot Admits No Wrongdoing in False Claims Settlement
As a condition of the settlement, Office Depot admitted no wrongdoing in this case. Company spokesman Owen Torres noted that the settlement was meant as a solution to stop ongoing litigation rather than an admission of guilt.
“Indeed Office Depot continues to believe that Sherwin’s allegations were factually and legally wrong,” according to a company statement about the settlement. “This resolution both avoids the costs and risks of protracted litigation and allows Office Depot to focus on its business priorities, including its integration with OfficeMax.”
The California schools and other public entities will be able to utilize this settlement money for various purposes. The settlement agreement represents a culmination of several years of investigations and ongoing legal battles related to the overcharging.
Tragically, David Sherwin passed away from cancer before he was able to collect any of his $23 million reward. His estate will instead receive the money.